tv Bloomberg Markets European Close Bloomberg August 22, 2016 11:00am-12:01pm EDT
the trading day in europe and you're watching the european close on bloomberg markets. ♪ we will take you from washington to brussels and cover stories in the next hour. here's what we're watching. shares of swiss chemical companies jump in today after your security officials gave a merger with -- a green light. pasteal, can it make it worldwide? >> 2016 is under consideration for a hike and the economy is close to being -- picking up speed. moving the dollar higher. ubs visiting as soon as next year. why everyone from investors to wholesale traders may see this
as a reality. >> let's have a look at where european equities are trading now just under 30 minutes to the close. i want to bring up the stoxx 600 today. flat at the moment looking up .1%. we were seeing gains earlier but those were short-lived. the impact of the fed comments pushed the dollar a bit nuanced on european stocks. we saw on exported gain a weaker euro and we shot insurance companies in line perhaps to benefit you see a higher rate from the fed. other hand, it is weighing on commodities. commodity produced or's really happen been on the overall stoxx 600 and dragging it down to trade pretty flat right now.
i want to show you the german 10 year bond yield as well. year bond yield has not actually been above zero since july 22. you can see it here until 2015. saying the bond market is comfortable with yields. germany also preparing for its first bond auction in two weeks coming on august 24th. to look at what is happening on currency markets, you can see it is mixed. dollar strength coming off a bit. ,terling against the greenback and finally, up 10.8% in the moment. biggest jump in more than a year. approvalr we heard the
had gone ahead, perhaps taking away one stumbling block. dayinutes into the trading in the u.s. your markets for the most part are down, still in negative territory, it will site with turn them around a little bit. potentially aiming to a rate rise later this month. the s&p 500 pointing unchanged. to the downside, wti crude is down by two and a quarter percent.
we are up 5%. happening out there and that one of these, we will talk about the deal in a few minutes. thank you. now let's check in. >> donald trump is calling for the clinton foundation to be shut down. saying the foundation is the most corrupt enterprise and clinical history and should be closed immediately. they said they would stop collecting money if clinton becomes president. in louisiana tomorrow to get a firsthand look there. criticized for not planning his vacation short last week.
he says he suggested president obama not come until the initial response is over. the former french president made it official -- he wants his old job back. formally announced he is running for president. his republican party holds primaries in november. 2007 22012. beenurrent president has shrinking in the polls. a government report says people should stockpile -- stockpile 10 days of food a custom of the that called a development could threaten the existence. global news 24 hours a day powered by more than 2600 journalists and analysts in more
than 100 and 20 countries. this is bloomberg. david: thank you. let's get back to the m&a news starting with the agreement to buy for $14 billion, more than a 20% free to -- premium. soaring on news today. let's bring in the executive editor here at -- here at bloomberg news. what is interesting about why they would pony up so much money >> they get a company that has an existing drug in cancer, prostate cancer as i understand it, and they are working on two other drugs, one in blood cancer and the other in breast cancer. pfizer is very interested in this. and you were hoping that was something you would build up that they have really been embarrassed because i do not thisthey had any sense
would ever goes high with a price whatever go this high. >> we had this opening bid a few months ago. radical different than what we saw today. who else? >> go back to late march. the bid was like $52 per share. at the end, it is $81 per share. valuation has more than doubled in roughly six months. oro not think morgan stanley no one thought it would ever go this high.
>> i would love to turn into another story, the news about national security officials. this is one of the biggest hurdles. >> i think they were at least 20% below. this is really the most important hurdle out there. deals like baker hughes or health insurance deals trying to merge. .hey have been strict think nine or 10 senators including chuck grassley out of iowa had raised concerns for the deal. >> approved by the end of the year.
we were lucky enough to break the fact that china -- that it was willing to do this deal, one of the biggest deals a chinese company had ever done. trying to do their merger, or similar competitors in the chemical space. those deals may or may not happen. >> thank you so much for on this down for us monday. coming up, the fed vice chairman sally ishares signals the fed may be getting closer to a rate hike. a look at what it could mean for the market. this is bloomberg. ♪
>> live from london, counting down to the european close. just about 15 minutes away. david: time now for a bloomberg business flash. fight with a supplier has led volkswagen to shut down production. for a supplier that halt deliveries while they battle it out in court. the head of italy's oil company can agree on a production freeze. he talks to bloomberg tv earlier today.
>> i hope really that they can find decisions -- increasing production. >> production next month in algeria. now a venture capitalist. media and data companies. that is your business update for the hour. >> let's take a closer look this week. the bloomberg index climbing to a one-week high after the fed vice chair sally fischer says the u.s. economy is already close to meeting the central bank goals. friday in jackson hole. joining us now is bloomberg's
derivatives strategist. great have you. we saw the dollar rises earlier. 10 year treasury deals down three basis points. given the news we see in the market, what are you interpreting will happen at jackson hole and further down the line this year? >> focused on the labor market to realized inflation. abouts what it has been and what we're potentially looking for on friday. trickyd inflation is a thing and inflation markets have been predicting it higher. there has been a lot of pain in that trade. they may allow for inflation to overshoot 2% barrier for a 13 month time.
two years forward. >> let me bring up the chart right here next to me. this is the proxy terminal rate. we can see it is pretty much near 1%. basically lower and lower. post bernanke tape retention mise. high.er tantrum a recession that has not given much conviction for higher inflation. outputs per hour in the u.s., basically up half of 1%. per hour, critical
for the gdp, basically 1%. dovish signal? >> the market does not really pricing longer hours. increase a hiking cycle. david: fed rate hike continues to be a risk with the capital arm. coming up in a few months. what are we seeing as we look at volatility ahead? >> very interesting. they are the lowest since 2014. back to the low volatility environment that we saw in 2013 and 2014. volatility.
short position in close to all-time highs. policy near all-time lows. the market is getting very complacent there. volatility strategies are very profitable. volatility is a dangerous game. it is a yield enhancement play by showing volatility. >> i want to briefly ask you about bonds. saying the bond market is comfortable with subzero yields. >> at the moment, we will be trapped and arrange on bond futures. we have a limited supply this week.
i think that will weigh on bonds. policy. the qe the rate limit, that premium may be taken off and we will see a selloff in bonds. medium to long-term will come in and grab that yields. >> thank you so much. up next, what are we talking about next? he will have to find out. this is number. -- this is bloomberg. ♪
>> on bloomberg surveillance with francine lacqua and tom mccain. ago, wer three weeks wrote to it -- we wrote to a lot of clients. it got misunderstood, but perhaps we should -- but to put conditions in line with other people who typically have a provision that they can charge negative interest rates, which we did not, that was a bureaucratic glitch. short periods of time. you have to protect yourself against a position.
you come in in the central bank is charging you. >> are you uneasy with negative rates? he may have to go into negative territory at some point. >> i guess he will search quite a long way to find a banker and is just about negative interest rates. i do not like the idea and i am personally in favor of trying to .ift overtime my concern is negative interest rates set of all kinds of perverse incentives. they also mean the central bank is not really in control.
you do not know how the economy will respond. i think what we need to learn tom this is we get used trying to targeted rate that is so low that you might find yourself at the lower bound and therefore out of trouble. that is what i do not like. tom: you know as well as anyone the idea of momentum or inertial force. i look at negative rates as a chronic x-axis. it is not we are at negative rates. it is how long we have been here. -- the just the tenured tenure rates. it is getting old -- specifically when looking at the short-term rates. the ramifications are simple. don't we just have to clear the balance sheets? isn't that what this is about, the denial of the need to clear the reset balance sheets?
>> yes, what we have seen is since the crisis, too little d rep -- deleveraging, unfortunately. report, not much deleveraging. rates,e of low interest the deposition has not been cleared and we still have quite a lot of other people as well. you're right that unless we clear off some of the debt, we will be faced with a chronic position of negative or zero interest rates for quite a long time and that have a bad concert in that when people will look at the uncertainty in the economy, suppose we do face a recession. what will the central bank do? they are at the lower band already. problemds back into a -- a problem of confidence.
the calvary can ride over and rescue you. >> that was howard davis earlier today. let's take a look at where the european markets are trading. heading to a close, just about four minutes away while the stoxx 600 is pre-much unchanged now. weaker as well. some of the movers we're watching, gaining after china received approval from u.s. national security, this is bloomberg. ♪
european close. stocks finishing up the day in european trading. less take you to all of the market action. the big picture on the bloomberg . we see declines in the dax and dow, lower today as well, ftse 100 up by .6%. second day of decline. hit.tse has .5%.e seeing sterling seeing money move into the bond markets in europe despite some of the hawkish comments, german 10 year yield down five basis points. this is how the stoxx 600 is finishing up today, almost a thickly flat at the moment. pointswe did see gains earlier.
we also did see insurance companies gain perhaps on the prospect of higher rates. the worst performers on the stoxx 600 is here. down 1.8%. i want to talk about some of the big numeral -- big movers we have been watching today. biggest gainer on the bench -- the benchmark. up at the moment but we have percent more on the year. this is after china received approval from u.s. national security officials for its takeover of syngenta. , a $43 billion acquisition.
you can see down 5.8%. anglo america down 4.3%. david? david: we have been looking at that effect here in the u.s. as well as taking a look at equities trading a new -- a range today. back into the red, we see the dow down .3%. the s&p 500 is down .3%. i and with the nasdaq down .2%. abigail doolittle is at the nasdaq with more. go: we have the nasdaq fluctuating between's -- abigail: we have the nasdaq fluctuating. up 20%.re aboved $.50 in cash, well the initial offer back in april.
the shareholders are probably pretty happy about her. these are all biotech stocks here for the nasdaq. on thethese stocks scarcity. similar andis very could come with a big price tag. a rare disease company. it could fit very well but however, what is interesting is it does not have it modeled to break even until fiscal year 2018. investors and companies may be willing to pay up for that. this is actually not m&a, it is more special it -- speculation. people saying they could be
bought in the price probably coming somewhere around 23-20 four dollars per share. the stock is already up 46% this year. $23 per share suggests the stock could move up by 20% from the current levels. the japanese rival, diversification, industrial and consumer and auto save haven. >> nina has more from the newsroom. leaders are meeting today to discuss brexit economic growth and threat of terrorism. aboard the time aircraft carrier . the deal with turkey to stem migrant flows.
it may be in jeopardy because of last month passes attempted coup. in the u k, members of the party favor tor maintain his job even though he has lost the support of most labor members. lawmakers have accused him of failing to campaign effectively. islamic extremist being held in prison. to keep them from spreading the ideology.
if that leads to more uncertainty, that can be a problem. up to this point, it is funded by foreign investment. we saw last week in the sales figures that that is postponed for now but investors are still on that fact. >> i'm sure there were upsides as well when you look at parts. >> the british tourism industry has done pretty well over the summer. coastlines, fishing villages in north yorkshire. it is up to an all-time high.
bucking a national trend for a lot of business confidence. retail sales figures .2 hertz from abroad and china coming in spending a lot of money in the u.k.. >> you point out in your store that options apply only a 31% chance in a few years. what could make it more likely? the bank of england or something else? >> the negotiation is really key. there is speculation that might trigger the negotiations as early as april of next year. a lot of uncertainty concerning what kind of package he will be able to negotiate. maybe you will see the pound strengthened but the key thing is foreign investment. lookinginvestors closely at what happens over the next year here that is the key .nd how the u.k. tries to
most compelling terms of the day. kicking things off is my colleague, matt miller. to beit is a pleasure here. very interesting to look at what is going on with oil lately. i have got that chart you can access on our library. you can type in matt miller and it will autocorrect. that is true. oil we know in price has come down because of fundamental , and nigeria,raq dialing down to allow oil to be reproduced. the reason oil went up in the past two weeks is a bit of a short squeeze. it shows open contracts. -- can see that it comes comes a lot.
covering the shorts, taking the that's off here no longer thinking oil would continue to fall. that is a reason we saw the price of oil run-up. the price per barrel is down here in blue and a p are come we see the open interest number of contracts on that side and short position on the side. you can always access this on bloomberg to get more from the chart. is it is a short bet. no longer the pressure for the downside that allows oil to come back up. the price of oil continues to fall and there is no one to cover short to hold it up. very important to keep in mind. >> we have to talk to folks about getting their own shortcuts. >> you can find, function for
the markets, we basically deep asking where the s&p rally will go from here. it perhaps had further to go. this has actually been right three out of four times over the past 26 years. all the way back to 1990, you have the indicator and orange. what this is based on is the belief by the economist to created this, that their markets resemble bereavement that last four months. stress between zero, it is considered a bullish signal. prior to this year, there have been four since 1990 and all of moveare precursors to higher in the s&p 500 apart from 2001. one, the lessst
indicator could be a sign of more things to come. the bullish indicator for the first time in seven years. 2009.st time was is also look at the indicator not just against the s&p 500 but also the ftse 500. both flashing bullish for indexes as well. david. david: thank you. we have got timeliness with oil prices on my left. i will give it to matt miller as we head to the meeting next month because of the short squeeze. congratulations. matt: i love the chart so much that i will use her in another addle of the charts later when i am not going against her. you. >> up next, waiting on a press conference on an aircraft carrier or we will break down
stephanie: -- david: live from new york. >> let's look at some of the biggest stories in the news right now. prime minister theresa may's increased spending on infrastructure. that could help stave off a slump caused by the vote to leave the european union. the bank of england is running out of options to simulate the -- the simulate the economy. the boom will come to an end
next year. country lies, housing prices in london will drop a little more than 1% in 2017. that will be the first decrease of 2009. meanwhile, britain's are making they have access to the european union. two months since the eu and since then, 16 embassies in indon reported increase applications or questions about residency. the dutch that 10 times the usual number of increased. that is the latest. david? david: we are awaiting a news conference, tossed between leaders of italy, france, and germany. talks are focused on the future of europe. set to begin in the next hour. we will monitor that. union headquarters.
there was so much travel in the aftermath of that referendum. what do we expect to the on the table today? are two months since the brexit vote and one month before leaders oflthough the european union apart from to work outleader, really the future of the european union. call. really a wake-up they do not want a big project to unravel. leadersabout the three apart from the u.k.. to get together and try to work out what to do. it is a show of unity. you think of all the challenges facing the in union, it is pretty much all on the agenda, migration to terrorism to what to do about turkey since the attempted coup, since economic growth.
work outall trying to what to do next, really. >> this is an opportunity replete with symbolism. aboard a boat in the mediterranean helping the refugee crisis. talk about the symbolic importance? right. is the big challenge facing europe was the refugee crisis. we some more than one million rest ages coming from north africa to europe and mainly germany. totally unprecedented. it really forced europe to work out what it was for. borders being closed and people saying the refugees and migrants should be sent back and particularly anger merkel said that is not what europe should be about. brexit, which was a
real wake-up call because people say maybe this was a consequence of inviting all the refugees to come, that people protested the -- against the european union. delicate balance and they're trying to work out on the one hand how to this -- still be a european union on the other hand, do what they are willing to do. >> this is just a start of a whirlwind week for her. right. is she is talking to practically every leader of the european union and they will be talking about where the european union can go from here. they want to put pressure on .heresa may for the u.k. to leave the eu. ,ut they also want to work out where does the eu go from here? massive project and it
is as unpopular as it has ever been. how can they turn it around and start to say the eu is a force for good and there is still something we can do to benefit the people? >> some of the most difficult discussions were central around the economy, budget conditions. >> that is right and we can all turkey -- talk about the refugee crisis and even brexit as being the acute problems. slow growth, and massive unemployment for nearly a decade now. nobody really needs to know how to turn that around. we have seen here and there some employmento create and investment.
there is nothing really being turnaround. > th>k you so much. here. we market closed 25 minutes ago. have a look at how those ended today. that was a short-lived rally. look at currencies and bonds. sterling stronger today. 10 year german bond yields down. yields are heading lower as well. this is bloomberg. ♪
scarlet: from bloomberg headquarters in new york, good afternoon i'm scarlet fu. matt: i matt miller. here is what we are watching. stocks struggle as investors parse signals from stanley fischer about a rate increase possibly. will his comments keep markets on the edge? medivation for $14 billion. we will cover what medivation has that everyone wanted. matt: donald trump thought it was a good idea to start a mortgage company in 2006, a year and half later of course it went bust. we will to you why it was risky business from the start and how it conflicts with his image today. withet: as always we start the markets. halfway through the u.s. trading day. rain